Dow Theory Trend Monitor

Friday, December 6, 2013

Dow Theory Update for December 6: Stocks close up strongly but fail to make higher highs

Gold and silver at crossroads.

US stocks

The Industrials, Transports
and SPY closed up. In spite of today’s strong close, no index managed to make a
higher high.

The primary trend is bullish,
as explained here,
and more in-depth here.

The primary trend was
reconfirmed as bullish on October 17th and November 13th, for the
reasons given hereandhere.

Today’s volume was lower than
yesterday’s. This is bearish, as higher prices were not met by stronger volume.
I’d label volume as bearish.

Gold and Silver

SLV and GLD closed timidly up. For the reasons I
explained here,
and more recently here, I feel the
primary trend remains bearish. Here
I analyzed the primary bear market signal given on December 20, 2012. The
primary trend was reconfirmed bearish, as explained here.
The secondary trend is bullish (secondary reaction against the primary
bearish trend), as explained here.

Here, I explained
that GLD and SLV set up for a primary bull market signal. However, a setup is
not the same as the “real thing," namely the primary bull market; thus,
many “setups” do not materialize and until the secondary reaction closing highs
are jointly broken up, no primary bull market will be signaled. However, such
set up will be nullified if GLD and SLV jointly violate the last recorded
primary bear market lows, as I explained here. I see a very
delicate technical picture for both SLV and GLD. If the reconfirmation of the primary bear market is to be avoided,
both ETFs should start rallying now. Failure to escape “danger zone” right now,
increases the odds for a dramatic decline. Here you have the charts
that say it all:

As to the gold and silver
miners ETFs, SIL closed up, and GDX closed down. The primary trend is bearish,
as was profusely explained hereand here. Likewise, the
secondary trend is bearish.

All in all, the last shoe to
drop for the precious metals sector would be GLD and SLV reconfirming the
ongoing primary bear market. Until this happens, the secondary trend is
bullish, and this is the only “bullishness” to be found in this beleaguered
sector.

Here you have the figures for
the SPY which represents the only market with a suggested open long position:

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This blog (dowtheoryinvestment.com) is strictly a personal journal applying my interpretation of Dow Theory principles to the action of the stock market and my musings about investment and trading in general. This blog is intended solely for entertaining, illustrative or informational purposes. I am not a registered investment advisor and neither the information nor the opinions expressed should be construed as a solicitation to buy or sell any stock, option, ETF, mutual fund, currency, commodity, or any other security. I am unaware of any readers personal circumstance, financial condition, risk tolerance or goals and objectives, so nothing read here should be considered advice suitable for them. Anyone reading this blog does so with the understanding that this is strictly meant as an analytical exercise and does not proffer actionable advice in any way, shape or form. Trading and investing always entail risk and possible loss of funds and should only be undertaken after appropriate due diligence by the trader/investor and after consulting a registered investment adviser.